Developer Liable for Assessments on Unconstructed Units

Facts

Developer recorded a Declaration in 2001 for the 260 Jamie Lane Condominium Association (“Association”) consisting of nine units in what seemed to be one building, with an allocation of the percentage interests based on the square feet of each unit. Like most Declarations, it provided that “[e]ach Unit Owner shall pay his proportionate share of the Common Expenses … in the same ratio as his percentage of ownership…” with corresponding lien rights if the payment was not made. The Developer sold five of the units in 2001 upon apparently completing a building within the Association. The Developer filed an amendment to the Declaration and Plat which stated that the building where the five sold units were, was complete and describing “the proposed units for a different building to be constructed on Lot 1.” The Developer continued to own the four uncompleted units. The Association at some point began assessing the Developer for the four unbuilt units, and when the Developer refused to pay, the Association placed a lien on the unbuilt units.

Trial Court

The Developer then sued seeking a declaratory judgment that the four unconstructed units owed no assessments and that the lien amounted to a slander of title. The Association filed a motion to dismiss the complaint based on the law and the Developer argued that the word “unit” is ambiguous and that the condominium documents when considered together demonstrate that his four units should not be assessed. The trial court in finding for the Association found that the definition of unit was not ambiguous and that nothing in the declaration distinguished between constructed and unconstructed units. Developer appealed.

Appellate Court Decision

The appeals court affirmed the decision of the trial court holding that in order to determine if the undeveloped units owed assessments it had to examine the relevant provisions of the Illinois Condo Act and the Declaration. It then found that the “parties’ arguments turn on the interpretation of ‘unit’” and found that nothing in the declaration required the unit to be constructed. The appeals court then held that all nine units were intended and that the Developer’s “unfairness” argument was not persuasive citing Aluminum Industries Corp. v. Camelot Trails Condominium Corp., 535 N.W.2d 74, 78 (Wis. Ct. App. 1995).

LESSONS LEARNED

As a Developer, when writing the Condominium Documents make sure they say what you intend them to say; and
If you’re not sure that they say what you intend, obtain an opinion of a qualified attorney that they will accomplish the purpose that you seek. At least then if you are wrong you would potentially have some options. See 181.0850 Wis. Stat. relating to a board member’s right to rely on a professional opinion.